WILSON t'. KNOX COUNTY.

481

WIUlONV. KNOX COUNTY.

(O£rcuit Court, N. D. Missouri. E. D. Septemb9r 2IS, 1890.)
FBDERAL COURTS-JURISDICTION-ASSIGNMENT OF CROSE IN AOTION.

By Act Congo March 3, 1887, providing that no circuit or district court of tbe United States shall have cognizance of any suit except upon foreign bills of exchange. to recover the contents of any promissory note or otber cbose in action in favor of any assignee, or of any subsequent bolder, if such instrument be payable to bearer and be not made by any corporation, unless such suit migbt bave been prosecuted in sucb court to recover tbe said contents if no assignment or transfer had been made, it was intended toprohibit suits in the federal court br assignees of choses in actions, unless the original assignor was entitled to maintalU the suit, in all cases except suits on foreign bills of exchange, and except suits an promissory notes made payable to bearer, and executed by a oorporation.

At Law. Action on promissory notes. This was a suit against Knox county, Mo., on certain county warrants aggregating $7,000, which were of thefolldwing form, omitting the dates, names of payees, amounts, etc.
"STATE OF MISSOURI.

"8 EDINA, -----'-. 188-. "T,'easurer of Knox County: Pay to - - - - - - dollars out of any money in the treasury appropriated for - - - fund.. Given at the courthouse the date above written, by order of the county court. "Attest: - - - , Clerk. - - - , Presiding JUdge."

The warrants were originally issued to a citizen of the state of Missouri, who assigned them to the plaintiff, a citizen of Illinois. The assignments are as follows: . "For value received, - - - 88sign the within warrant to - - - . this - - day of---, 18-." Both the warrants and the assignments thereon are in the fa-rm prescribed by the laws of the state of Missouri for drawing and assigning such instruments. W. C. Hallister and F. H. McCullottgh, for plaintiff. JameB Carr, for defendant. Before MILJ,ER, Justice, and CALDWELL, J. MILLER, Justice. This case is pending in the northern division of this district, but by stipulation of counsel has been argued before us in the eastern division of the district. The question that arises on the demurrer to the plea of the jurisdiction is whether the assignee of the warrants can maintain a suit thereon in this court, under the judiciary act of March 3, 1887, although the original holder was incapacitated from such a suit. The clause of the act under which the question arises is as follows: "Nor shall any circuit or district court have cognizance of any suit except upon foreign bills of exchange, to recover the contents of any promissory note or other chose in action in favor of any assignee, or of any subsequent holder, if such instrument be payable to bearer and be not made by any corporation. unless such suit might have been prosecuted in such court to recover the said contents if no assignment or transfer had been made." v.43F.no.8-31

482

REPOR;J:ER,

vol

The contention for the plaintiff is that the court has jurisdiction of the suit at bar, because the instruments sued upon are not "payable to bearer." and are "made by a corporation." This we think is an erroneous view ofthe law. Congress did. not intend to give the federal courts jurisdiction of all suits by assignees of and other choses in. aetion,'if the assigned choses were made by a. corporation and were notpayableto bllltrer. That construction wouldextend the jurisdiction of. the federal.courts, without any,apparent reason, a class of suits by assignees ofcll0ses' in atltion,never before within their jurisdiction, whereas the main purpose ofthe fl,ct of 1887 seems to have been to curtail theirjurisdiction. rule enunciated by the statute is that the federal courts shall not have jurisdiction of a suit by an assignee "of a promissory note or other chose in action," when the assiglior could not maintain such aauit. The clause, "if such instrument be payable tti"bearer and be not ,made by any corporation," operates as an exception to the general rure;and gives the federal courts jurisdiction, of those suits by assignees,where the action is founded on an made by a corporation, that is payable to bearer, and is negotiable by mere delivery,., In 'the light of previous legislation on the subject, our is that congress intended by'the act of :March 3, 1887. to prohibit suits in the federal court by of (lhoses in. unless the ,original entitled to maintain the suit, iIlallcases except suits on ,foreign bills of exchange, and except suits on promissory notes made payablEi execute\lbya corporation. Construed in this way,' the act of 1887 operafes to restrict to sbme extent the jurisdiction exercised, under the act of March 3, 1875, whicn was probably the intentionOfthe law-maker. The instruments sued upon in this instance. though executed by a quasi corporation, are not payable to bearer, and are Ddt eveIi negotiable instruinentsunder the law il1erchant. It follows, therefore; that an assignee of the warrants in question has no greater right to sue hI this court than the original payee. and the demurrer to· the plea will be overruled. The views we have expressed are also entertained in other circuits and districts. Vide Newga88 v. 'NewOrleml.s. 33' Fed. Rep. 196; RoUins v. Chaffee Co., 34 Fed. Rep. 91.
i',';F.

f'·

483
lESUP

v.

ILLINOIS CENT.

R.

tI.

CO.

et al.

DuBUQUE

& S.C. R. CO.

JESUPet al.

(Circuit Court, N. D.IZlinof8;October6,1890.)

1.

EQUITY-J'URISDICTJON-RAli:aOAD LEAS_ENFORCEMENT.

In September, 1866, the Cedar Falls Railroad. Comllany leased its road to the Dubuque Com pany for the term of 40 years. A veal' later the Dubuque Company leased its own road to the Illinois Central Railroad'Company for 20 years, with the option to retain it in perpetuity, the la'tter company agreed to assume the lease theretofore entered into between 'tho Dubuque and the Cedar Falls Railroads. HeW" that the assumption of this lease by the Illinois Central created no direct obligation on its part to the Cedar Falls Company which it or its mortgagees could enforce by an action at law, but such obligation could be enforced only by a'suit in equity. '
,

S.

RAILROAD' COMPANJES-Ass,MPTION Oll' LEAS_CONSTRUCTION.

As the Illinois Central elected to surrender both the Dubuque and Cedar Falls roads to the Dubuque Company, after the expiration of 20 years, the assumption of the lease of the Cedar Falls road by the Illinois Central does not bind it for the rent of the Cedar Falls road after the expiration of the 20 years for which it had leased the Dubuque road, which forms the connecting link between the Illinois 'Centraland the Cedar Falls Railroads.

S. SAME-ESTOPPEL.

imum rent which that comllany had thereby obligated itself to pay is more 'than sufticient to meet the entire amount of interest on the bonds, does not estop the Illinois Central from denyipg its liability Oll tbe lease after the expiration of the 20 years, where such indorsement was not made at its instance or by its direction·
.. EQUJTY-JURISDICTION-CROSs-BJLL-DISHIS8AL OF ORIGINAL BILL.

to the' effect that the Illinois Central had assumed the lease, and that the min-

An indorsement on the bonds of the Cedar Falls Company, made by its.

The trustee In a mortgage executed by the Cedar Falls Company to secure the proper application of the rents of its road filed his bill a'_ ainst the Illinois Central, the Dubuque, and the Cedar Falls Companies, alleging the insolvency of the latter company an.d its refusal to collect tbe rents. The prayer of the bill was that the trustee be henceforth empowered to collect such rents, and that the lease be declared binding on the Illinois Central for the entire term of 40 years. HeW that, after a dismissal of the bill as to the Illinois Central, the court still had jurisdiction of a cross-bill filed by the Dubuque Company against the Cedar Falls Company and the trustee for a cancellation of the lease of the Cedar Falls road, as tlie relief sought by the cross-bill is directly. connected with the subject-matter· of the original bill, and is of an affirmative character. The fact that the Dubuque Company and the Cedar Falls Company are both Iowa corporations will not defeat the jurisdiction of, this court over the cross-bill \ both of these corporations being properly before the court as parties to the original bill.

6.

SAME-RESIDENCE.

Go

RAILROAD COMPANIES-LEASE-FRAUD OF DIRECTORS.

The the dirO(,wrs of the Dubuque Company failed to make the continuance of the lease of the Cedar Falls road dependent on construction of roads in Minnesota that would connect that road with St. PauloI' Minneapolis, which was the expectation when the lesse was executed, but whicb expectation was realized, will not warrant the presumption that the directors of the Dubuque Company were guilty of actual fraud towards that company in executing the lease. Neither will the court induljte the presumption of fraud against the directors of the Dubuque Company because the rent stipulated for in the lease turned out to be larger than the business over the Cedar Falls road really justified, where such rent was fixed in accordance with the report of coml'etent and disinterested experts, to whointhat question had been referred.
OF FRAUD.

'I.

SAH_ExCESSIVE RENT.

8.

.... The fact t,bat the bonds and allowed by the Cedar Falls to those its road, some of whom were also directors of the Dubuque Company, were.in excess: of the actual cost of construction. is a matter entirely betlWeentbe Cedar Falls Company and those who received such bonds, and in no .tbe Dubuque Company or the validity of its lease of the Cedar :9'alls road.